econ

I'am getting really confused with exchange rates. Like when a currency appreciates, what does that mean? Are the foreign goods more expensive or cheaper? How about when it depreciates? It would be helpful if somebody gave me a quick lesson on this. Thanks.

  1. 👍 0
  2. 👎 0
  3. 👁 263
  1. When a currency (let's say the dollar) appreciates relative to another currency, it is worth more of the of the other country's currency and prices of that country's goods usually become cheaper. Conversely, the prices of the goods sold to the foreign country usually go up, since they must spend more of their money to get the dollars needed to buy the product. However, sometimes manufacturers in the country with the appreciating currency will lower their prices to keep market share.

    The opposite it true if a currency depreciates, as has been happening with the dollar for the last five years or so. The dollar has fallen relative to most major (and some minor) world currencies during that time.. even the Mexican peso, Russian ruble, and the Croatian kuna.

    Usually whether a currency is appreciating or not is based upon an average of its value compared to currencies of the major world economies, especially the Yuan, Pound, Yen and Euro.

    1. 👍 0
    2. 👎 0

Respond to this Question

First Name

Your Response

Similar Questions

  1. History

    Which accurately describes the Columbian Exchange during the Age of Discovery? The Columbian Exchange was a system of cultural sharing developed by Columbus and the natives on the island of Hispaniola. The Columbian Exchange was

  2. Social studies.

    The earliest type of trade was A. Bartering B. Currency C. Economies D. Cowry shell currency Is the answer A? Thank you

  3. World History

    How has the Asia-Pacific Economic Cooperation (APEC) helped Asian countries? APEC facilitates trade between Pacific Rim nations by promoting a single currency to eliminate exchange rates. APEC reduces trade barriers and promotes

  4. Social Studies

    Which of the following is an advantage to having a common currency in the European Union? A. It allows each government to make its own policy regarding currency. B. It allows the worth of the currency to change depending on the

  1. Entrepreneurship

    1. Of the following situations, the one that does NOT usually cause an increased interest rate is A. Political uncertainty B. When people are saving more and borrowing less. C. When inflation is increasing D. When people are

  2. finance

    A Canadian exporter, Victoria Exports, will be receiving six payments of €10,000, ranging from now to 12 months in the future. Since the company keeps cash balances in both Canadian dollars and US dollars, it can choose which

  3. MacroEconomics

    I have the first 4 parts but fall short on the last 2 answers: For each of the following situations, indicate the direction of the shift in the supply curve or the demand curve for dollars, the factor causing the change, and the

  4. Economcis

    I need some help on the following question, thanks. e = euros Suppose quotes for the dollar-euro exchange rate, E$/e, are as follows: in New York $1.50 per euro, and in Tokyo $1.55 per euro. Describe how investors use arbitrage to

  1. algebra

    euros are currency used in several european countries. on one day in october 2005, you could exchange $3 for about 2.5 euros. how many dollars would you have needed to get 8 euros.

  2. 11th grade

    4. The use of technology such as telephones and computers means that money exchanges and other financial transactions can be a. based on the U.S. dollar all over the world. b. converted to prices in any currency. c. made

  3. Civics

    Beginning in 1995, most countries in the European Union started to switch to a common currency. The values of different European currencies were linked to the euro. Countries in the European Union could then trade without

  4. HELP PLEASE

    I am extremely confused on how to balance a chemical equation. I have an exam tomorrow and I'm lost. In the book it says Chemical Equation: CH4 + O2 > CO2 + H2O Balanced Chemical Equation: CH2 + 2O2 > CO2 + 2H2O How did this

You can view more similar questions or ask a new question.